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Question 1 of 10
1. Question
Which of the following statement is true about NAMC?
Correct
FINRA rule no 14102. National Arbitration and Mediation Committee
Pursuant to Section II of the Plan of Allocation and Delegation of Functions by FINRA to FINRA Regulation, Inc. (“Delegation Plan”), the Board shall appoint a National Arbitration and Mediation Committee (“NAMC”).
(1) The NAMC shall consist of no fewer than ten and no more than 25 members. At least 50 percent of the NAMC shall be Non-Industry members.
(2) The Chairperson of the Board shall name the Chairperson of the NAMCIncorrect
FINRA rule no 14102. National Arbitration and Mediation Committee
Pursuant to Section II of the Plan of Allocation and Delegation of Functions by FINRA to FINRA Regulation, Inc. (“Delegation Plan”), the Board shall appoint a National Arbitration and Mediation Committee (“NAMC”).
(1) The NAMC shall consist of no fewer than ten and no more than 25 members. At least 50 percent of the NAMC shall be Non-Industry members.
(2) The Chairperson of the Board shall name the Chairperson of the NAMC -
Question 2 of 10
2. Question
Which of the following statements is/are true regarding “call” and “put” terms?
I. Terms are used in connection within currency or currency index
II. Terms are used in connection within interest-bearing liabilities
III. Terms are used in connection within the options contract
IV. Terms are used in connection between equity and capitalCorrect
FINRA rule no 4210. Margin Requirements
as used in connection with a currency, currency index or stock index warrant means a warrant structured as a “call” or “put” (as appropriate) on the underlying currency, index currency group or stock index group (as the case may be) or
b. as used in connection with an option contract means an option under which the holder has the right, in accordance with the terms of the option, to purchase form (in the case of a call), or sell to (in the case of a put)Incorrect
FINRA rule no 4210. Margin Requirements
as used in connection with a currency, currency index or stock index warrant means a warrant structured as a “call” or “put” (as appropriate) on the underlying currency, index currency group or stock index group (as the case may be) or
b. as used in connection with an option contract means an option under which the holder has the right, in accordance with the terms of the option, to purchase form (in the case of a call), or sell to (in the case of a put) -
Question 3 of 10
3. Question
Which of the following is/are true about fidelity bonds?
I. business insurance that offers employer protection against losses
II. they can be either monetary or physical in terms of protection
III. these bonds are trade-able and can acquire interest just like regular bonds
IV. fidelity bonds often provide protection caused by its employees’ dishonest actionsCorrect
FINRA rule no 4360. Fidelity Bonds
a fidelity bond is a form of business insurance that offers employer protection against losses – either monetary or physical – caused by its employees’ fraudulent or dishonest actions. Fidelity bonds are often held by insurance companies and brokerage firms, which are specifically required to carry protection proportional to their net capital. Among the possible forms of loss, a fidelity bond covers include fraudulent trading, theft, and forgery. In Australia, a fidelity bond is called “employee dishonesty insurance,” and in the U.K. it’s called “fidelity guarantee insurance.”Incorrect
FINRA rule no 4360. Fidelity Bonds
a fidelity bond is a form of business insurance that offers employer protection against losses – either monetary or physical – caused by its employees’ fraudulent or dishonest actions. Fidelity bonds are often held by insurance companies and brokerage firms, which are specifically required to carry protection proportional to their net capital. Among the possible forms of loss, a fidelity bond covers include fraudulent trading, theft, and forgery. In Australia, a fidelity bond is called “employee dishonesty insurance,” and in the U.K. it’s called “fidelity guarantee insurance.” -
Question 4 of 10
4. Question
Which of the following statements is/are true regarding “Time Within Which Margin or “Mark to Market” Must Be Obtained”?
I. the margin should be obtained within 15 days from the date
II. the margin can be obtained later if FINRA has given additional time
III. the margin should be obtained within 20 days from the date
IV. the margin should be obtained within 25 days from the dateCorrect
FINRA rule no 4210. Margin Requirements
The amount of margin or “mark to market” required by any provision of this Rule shall be obtained as promptly as possible and in any event within 15 business days from the date such deficiency occurred unless FINRA has specifically granted the member additional time.Incorrect
FINRA rule no 4210. Margin Requirements
The amount of margin or “mark to market” required by any provision of this Rule shall be obtained as promptly as possible and in any event within 15 business days from the date such deficiency occurred unless FINRA has specifically granted the member additional time. -
Question 5 of 10
5. Question
Which of the following statement is/are true regarding a participating broker-dealer?
I. must be registered under SEC
II. maintain an ownership interest in the carrying/clearing member pursuant to the Federal Reserve Board
III. maintain an ownership interest in the carrying/clearing member pursuant to Federal Reserve Bank
IV. maintain a minimum liquidating equity of $1 million in the JBO arrangement exclusive of the ownership interestCorrect
FINRA rule no 4210. Margin Requirements
A participating broker-dealer must:
a. be a registered broker-dealer subject to the SEC’s net capital requirements and, if applicable, Rule 4110(a);
b. maintain an ownership interest in the carrying/clearing member pursuant to Regulation T of the Federal Reserve Board, Section 220.7; and
c. maintain a minimum liquidating equity of $1 million in the JBO arrangement exclusive of the ownership interest established in subparagraph (ii)b. above. When the minimum liquidating equity decreases below the $1 million requirement, the participant must deposit a sufficient amount to eliminate this deficiency within 5 business days or be subject to margin account requirements prescribed for customers in Regulation T, and the margin requirements pursuant to the other provisions of this Rule.Incorrect
FINRA rule no 4210. Margin Requirements
A participating broker-dealer must:
a. be a registered broker-dealer subject to the SEC’s net capital requirements and, if applicable, Rule 4110(a);
b. maintain an ownership interest in the carrying/clearing member pursuant to Regulation T of the Federal Reserve Board, Section 220.7; and
c. maintain a minimum liquidating equity of $1 million in the JBO arrangement exclusive of the ownership interest established in subparagraph (ii)b. above. When the minimum liquidating equity decreases below the $1 million requirement, the participant must deposit a sufficient amount to eliminate this deficiency within 5 business days or be subject to margin account requirements prescribed for customers in Regulation T, and the margin requirements pursuant to the other provisions of this Rule. -
Question 6 of 10
6. Question
Which of the following statement is/are true about portfolio margin?
I. The objective of portfolio margining is to offset the risks to the lender through consolidating, or netting positions to account for a portfolio’s overall risk
II. It typically results in drastically higher margin requirements for hedged positions as compared to traditional policy rules
III. Portfolio margin refers to the modern composite-margin policy that must be maintained in a derivatives account
IV. Portfolio margin is to be measured by simulating the impact of market volatilityCorrect
FINRA rule no 4210. Margin Requirement
As an alternative to the “strategy-based” margin requirements set forth in paragraphs (a) through (f) of this Rule, members may elect to apply the portfolio margin requirements set forth in this paragraph (g) to all margin equity securities,1 listed options, security futures products (as defined in Section 3(a)(56) of the Exchange Act), unlisted derivatives, warrants, stock index warrants, and related instruments (as defined in paragraph (g)(2)(D)), provided that the requirements of paragraph (g)(6)(B)(i) of this Rule are met.
In addition, a member, provided that it is a Futures Commission Merchant (“FCM”) and is either a clearing member of a futures clearing organization or has an affiliate that is a clearing member of a futures clearing organization, is permitted under this paragraph (g) to combine an eligible participant’s related instruments with listed index options, unlisted derivatives, options on exchange-traded funds (“ETF”), stock index warrants and underlying instruments and compute a margin requirement for such combined products on a portfolio margin basis.Incorrect
FINRA rule no 4210. Margin Requirement
As an alternative to the “strategy-based” margin requirements set forth in paragraphs (a) through (f) of this Rule, members may elect to apply the portfolio margin requirements set forth in this paragraph (g) to all margin equity securities,1 listed options, security futures products (as defined in Section 3(a)(56) of the Exchange Act), unlisted derivatives, warrants, stock index warrants, and related instruments (as defined in paragraph (g)(2)(D)), provided that the requirements of paragraph (g)(6)(B)(i) of this Rule are met.
In addition, a member, provided that it is a Futures Commission Merchant (“FCM”) and is either a clearing member of a futures clearing organization or has an affiliate that is a clearing member of a futures clearing organization, is permitted under this paragraph (g) to combine an eligible participant’s related instruments with listed index options, unlisted derivatives, options on exchange-traded funds (“ETF”), stock index warrants and underlying instruments and compute a margin requirement for such combined products on a portfolio margin basis. -
Question 7 of 10
7. Question
Which of the following statement is/are true about exercise price?
I. The exercise price is the price at which an underlying security can be purchased or sold when trading a call or put option
II. The exercise price is the same as the strike price of an option
III. An option gets its value from the difference between the fixed exercise price and the market price of the underlying security
IV. Call and put options does not have an exercise priceCorrect
FINRA rule no 4210. Margin Requirements
The term “exercise price” in respect of an option or warrant contract means the stated price per unit at which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) upon the exercise of such option contract.Incorrect
FINRA rule no 4210. Margin Requirements
The term “exercise price” in respect of an option or warrant contract means the stated price per unit at which the underlying security may be purchased (in the case of a call) or sold (in the case of a put) upon the exercise of such option contract. -
Question 8 of 10
8. Question
Which of the following statement is/are true about exempted securities?
I. financial instruments that are registered under the Bank Secrecy Act
II. financial instruments that do not need to be registered with the Securities Exchange Commission (SEC)
III. the government backs these securities
IV. carry a lesser risk than securities offered by public companiesCorrect
FINRA rule no 4210. Margin Requirements
Exempt securities are financial instruments that do not need to be registered with the Securities Exchange Commission (SEC). They are generally backed by the government and may carry a lesser risk than securities offered by public companies. Exempt securities, under Section 4 of the Securities Act of 1933, are financial instruments that carry government backing and typically have a government or tax-exempt status.Incorrect
FINRA rule no 4210. Margin Requirements
Exempt securities are financial instruments that do not need to be registered with the Securities Exchange Commission (SEC). They are generally backed by the government and may carry a lesser risk than securities offered by public companies. Exempt securities, under Section 4 of the Securities Act of 1933, are financial instruments that carry government backing and typically have a government or tax-exempt status. -
Question 9 of 10
9. Question
In case of an account confirming to the condition, exemption application as of the date of request should include?
I. cost price, offering price and the principal amount of obligations which have been purchased or may be required to be purchased
II. Approximate aggregate indebtedness
III. Approximate net capital
IV. Approximate value of common sharesCorrect
FINRA rule no 4210. Margin Requirements
In the case of an account conforming to the conditions described in this paragraph (e)(3), the exemption application shall also include the following information as of the date of the request:
(A) complete description of the security;
(B) cost price, offering price and the principal amount of obligations which have been purchased or may be required to be purchased;
(C) date on which the security is to be purchased or on which there will be a contingent commitment to purchase the security;
(D) approximate aggregate indebtedness;
(E) approximate net capitalIncorrect
FINRA rule no 4210. Margin Requirements
In the case of an account conforming to the conditions described in this paragraph (e)(3), the exemption application shall also include the following information as of the date of the request:
(A) complete description of the security;
(B) cost price, offering price and the principal amount of obligations which have been purchased or may be required to be purchased;
(C) date on which the security is to be purchased or on which there will be a contingent commitment to purchase the security;
(D) approximate aggregate indebtedness;
(E) approximate net capital -
Question 10 of 10
10. Question
Which of the following statement is/are true regarding breakpoint sale?
I. Breakpoint sales do not provide fee discounts to investors based on investment breakpoint levels determined by the fund company
II. A breakpoint sale is the sale of a mutual fund at a set dollar amount
III. If an investor is unable to provide the funds needed to qualify for the lower fee, he can sign a letter of intent
IV. Fund companies are responsible for structuring sales loads and breakpoint schedulesCorrect
FINTA rule no 2342. “Breakpoint” Sales
A breakpoint sale is the sale of a mutual fund at a set dollar amount that allows the fund holder to move into a lower sales charge bracket. If at the time of investment, an investor is unable to provide the funds needed to qualify for the lower fee, he can sign a letter of intent promising to reach the total amount, or breakpoint, in a set time period.Incorrect
FINTA rule no 2342. “Breakpoint” Sales
A breakpoint sale is the sale of a mutual fund at a set dollar amount that allows the fund holder to move into a lower sales charge bracket. If at the time of investment, an investor is unable to provide the funds needed to qualify for the lower fee, he can sign a letter of intent promising to reach the total amount, or breakpoint, in a set time period.